Papa Johns, which has struggled with weak sales for the past two years, is closing restaurants, cutting staff and eliminating some menu items in a bid to improve its overall profitability, the company said on Thursday.
Speaking on the company’s fourth-quarter earnings call, CEO Todd Penegor said that the Atlanta-based pizza chain will close 300 underperforming restaurants across North America by the end of 2027. Two-thirds of those closures are expected this year.
The restaurants are mostly franchisee-owned and have average-unit volumes of less than $600,000, CFO Ravi Thanawala said on the call, according to a transcript on the financial services site AlphaSense. They also have negative EBITDA, or earnings before interest, taxes, depreciation and amortization.
The company is also cutting 7% of its corporate staff as part of a reorganization.
Papa Johns CEO Todd Penegor also said that the chain is planning “at least $25 million in cost savings outside of marketing” through 2027, with $13 million expected this year. Penegor said that the company is changing its organizational structure to “increase efficiency and simplify operations.”
The cuts will also hit the company’s menu.
Thanawala said that the chain plans to eliminate Papadias, the chain’s sandwich product, and Papa Bites from the company’s menu in the second quarter.
The eliminations are expected to pressure same-store sales by 150 basis points this year but Thanawala said that the decision was made following productivity studies and comments from franchisees and customers.
“We really took a thoughtful approach to the closures and really conducted a full review,” Penegor said on the earnings call. He noted that the company examined restaurants where the trade area moved away or which would require a significant investment to improve their performance.
He called it “an opportunity to really take care of our lowest [average-unit volume] and our more challenged EBITDA restaurants to really strengthen the system and help on the four-wall profitability and help on our overall AUVs.”
The rash of announcements come after the pizza chain said its same-store sales fell 5% in North America in the fourth quarter, continuing a run of weakness that the company hasn’t seen in years.
Papa Johns last reported sales weakness on this level in 2018 and 2019, following controversy surrounding the chain’s founder, John Schnatter.
The company is dealing with a pizza market that has been weak for the past two years along with a fast-food environment that itself has been challenged as customers, burdened by inflation, reduce visits. Pizza Hut, whose parent company Yum Brands has put it on the market, announced 300 store closures earlier this year.
More customers are also shifting business to third-party delivery, where options are more plentiful.
The bulk of pizza chains are now on the aggregator apps like DoorDash and Uber Eats, notably Papa Johns that was the first major pizza chain to use third parties. Yet Penegor suggested that the company has “to compete even stronger” on third-party channels.
Some of that could be helped by the chain’s shift back to local marketing. The company moved away from local marketing in 2024, which ignited the current run of sales weakness. Under Penegor, the company has reformed local marketing coops that can work to drive more offers on third-party delivery apps.
As for Papadias, which were introduced in 2021 and, for a time, credited for lifting the chain’s sales, Penegor said that they’re being eliminated to reduce menu complexity. “The elimination of Papadias and Papa Bites will have an impact on our business, but it’s absolutely the right thing to do from an ops complexity, to create great service experiences time and again going forward,” Penegor said.
Penegor is testing oven-toasted sandwiches for a hand-held item to sell to consumers. But he also noted that the chain sold 4% more pizzas in 2025 and the company said its pan pizza, introduced in January, is performing above expectations.
And he, like Domino’s CEO Russell Weiner earlier this week, said that the pizza category has potential.
“We are positioning the business to win in a category that has staying power and growth opportunities,” he said. “Pizza is a go-to for families and friends in everyday moments, special occasions and gatherings. And that deep-rooted consumer affection ensures pizza remains one of the most durable food categories.”
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